I’ve spent a bit of time destruction testing the Fair Tax Mark. If it is to be used as a fair methodology, it needs to produce fair results in all situations.

One way of showing an ineffective method is putting in two situations that you would expect to show a contrast and arriving at exactly the same result. Here I’ve taken a company with an actual effective rate of tax of 35% over six years and one with a rate of 6%.

Spot the difference (click for full-size):

“Surprisingly” the results under the FTMRNG are exactly the same. Both would score zero, despite the fact that one company has paid significantly more tax than expected and one significantly less.

2 Responses to Fair Tax Mark – spot the difference competition

What you seem not to realise is we could have used a single year’s result and the weighting according to you would have been right

And you could have said we should have used eight years of data 0 going back into far history, which may have been very misleading

And what you would miss in both cases is that now is important – and some time ago is not

And that’s what we weighted – quite correctly – with the desired impact that your example shows – which is recent behaviour is more significant than past behaviour

Now it’s a judgement that we made – and you are very welcome to disagree with it – and you clearly do – but it’s simply judgement, not a matter of right and wrong in this case

And given that tax is paid by year we maintain any other averaging system – for example the one of aggregating profits and tax paid that you use – would ignore the true nature of the tax system and be wildly inaccurate

It’s interesting that you agree the examples and say that is what your method judges to be fair. The company in picture A would get a score of five for paying £2 more tax, rather than a zero. Despite having paid thousands of pounds more than expectation.

That’s your judgement Richard. Most other people don’t agree.

You also say that companies avoid tax by deferring their liabilities. Company A doesn’t. And yet you do not recognise that fact in your method. Instead you let relatively small profits produce absurdity.

That’s your assumptions and rhetoric being contradicted by your method.

Rather than trying to sell your judgement, assumptions and rhetoric, why don’t you just stick to the facts and let people apply their own?